KT Cloud, cloud and data center spinoff from Korean telecom giant KT Corp., is set to attract funds worth 800 billion won ($573.06 million) from multiple capital from home and abroad betting high on the company’s credentials in servicing public and corporate digital transition.

According to the investment banking industry on Wednesday, global private equity firms such as Macquarie Asset Management and KKR & Co., and domestic capital like IMM Credit & Solutions and VIG Alternative Credit submitted intentions to comply in the invitation for equity investment by Sept. 2 deadline.

The company will soon shortlist the candidates eligible to buy about combined 20 percent stake through new stock issues worth 800 billion won. Credit Suisse is advising the fundraising.

KT Cloud, spun off in April from its parent firm KT Corp., provides cloud management services to the government and companies and operates internet data centers (IDCs). It holds the second-largest share in the domestic cloud service market, following Amazon Web Services. Although it holds a solid market base, latecomers, such as NHN Could, Naver Cloud, and Kakao Enterprise, are catching up fast. KT plans to use the fresh capital to make further investments to maintain lead.

IDC is the company’s key strength and primary source for earnings by providing IDC services to IT firms and cloud service providers. The market has grown rapidly due to the rising demand for digital transformation in the corporate sector. The number of data centers rose to 158 in 2019 from 50 in 2000.

The government’s possible change in the cloud security assurance program (CASP) may be a setback to KT’s cloud service business. Although public procurements so far have favored homegrown cloud service providers, an amendment may open the market to global firms, such as Amazon Web Services and Google Cloud Platform.

KT Cloud achieved sales of 455.9 billion won last year and targets to grow to 2 trillion won by 2026, riding on corporate sector’s digital transformation. The IDC and cloud service market will likely grow to 11. 6 trillion won by 2025, according to KT.

Strategic investors of parent KT Corp. are said have protested to the separate funding scheme. KT would be coming up with protection for existing shareholders.

By Kang Woo-seok and Jenny Lee

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